As European leaders are being criticized for their austere approach to economic recovery, Fed Chairman Ben Bernanke is similarly fending off critics who believe he’s not doing enough to grow the economy. Europe’s obssed with cuts; Bernanke, the argument goes, is obssessed with inflation.

Remember, the Fed has two mandates: to create “stable prices” (largely, keeping inflation in check) and to help maintain “full employment”. Bernanke’s critics, of late, have accused him of worrying far too much about the former.

And at the heart of the debate is whether a tactic long-taboo to central bankers, inflation, is in fact what the U.S. needs to drive unemployment down. (Think of the effect inflated housing prices could have on unemployment.)

During yesterday’s Paul vs. Paul debate on Bloomberg TV, Paul Krugman again argued that the “notion that wages are fixed and any inflation comes at the expense of workers is wrong. Wages tend to rise faster in an economy that’s doing well.” Ron Paul portrayed any inflationary policies as theft from savers.

Pimco’s Bill Gross took the bond owner’s view and warned that an “ocean” of credit created by central bank policies was also adding to investors’ worries about inflation. Hedge fund manager David Einhornexpressed much the same concern. At the Atlantic, Matthew O’Brien called the inflation threat a “boogeyman” and chalked up fears that inflation is really far higher than official statistics indicate to an “understandable mistake. But still a mistake.”

The Fed’s members themselves don’t agree on how much inflation is right for the economy; Bernanke, for his part, shows no signs of changing his position. – Ben Walsh